AbstractsEconomics

Reported levels of household life satisfaction, also referred to as subjective well-being, increased dramatically in South Africa following the end of Apartheid. This study uses household surveys from 1993-1994 and 1998 in South Africa to investigate why. Models of subjective well-being are estimated following previous literature and a Oaxaca decomposition is then applied, which allows subjective well-being and the determinants of subjective well-being to be examined in a new framework. The decomposition determines what portion of the life satisfaction increase in South Africa is due to improvements in living conditions and what portion is due to changes in the way certain factors reward life satisfaction. The results suggest that fully 92.9 percent of the increase in life satisfaction is due to changes in the reward from the factors considered, not to improvements in living conditions. The results suggest that the determinants of subjective well-being can change substantially over time, and that changes in governmental and social systems can be as or more important than more commonly considered determinants of subjective well-being.